General Insurance
What is adverse selection in insurance?
Answer and explanation
Answer: A. Adverse selection is the pull exerted by applicants who expect to have losses, and underwriting exists to counter it so the premium matches the risk assumed. It describes the behaviour of applicants rather than of insurers, producers or regulators.Source: PSI — New York DFS Insurance Candidate Information Bulletin — Outline, adverse selection
More general insurance questions
- What do independent rating services such as A.M. Best assess about an insurer?
- What does the law of large numbers allow an insurer to do?
- What does the mandatory fraud warning on a life insurance application state?
- What does the principle of utmost good faith require of the parties to an insurance contract?
- What does the term 'unilateral' mean in relation to a life insurance contract?
- What follows from an insurance policy being a personal contract?
621 New York questions like this one.
Every answer explained, the ones you miss come back on a spaced schedule, and a plan built from your exam date.